MOVING TOWARDS A KNOWLEDGE-BASED ECONOMY – ABU DHABI CASE STUDY

Between 2009 and 2011, the Abu Dhabi Department of Economic Development developed a comprehensive modelling capability for the Abu Dhabi economy. This study uses the modelling system to analyze the relative efficacy of alternative labour market policies, along with more general economic development policies. The policies analyzed are based on the economic policy priorities identified in the Abu Dhabi Economic Vision 2030 (the “Vision”) which is a long-term planning document that was produced by the Abu Dhabi government to assist in guiding economic policy over the next two decades towards transition to Knowledge Based Economy.
The Vision also recognizes that a key policy to strengthen the Emirate’s economic future is social and human resources development. In fact, it is noted that social and human resource development is the “pre-eminent objective and driving motivation behind all policies and initiatives”. With respect to the workforce, the Government’s aim is to “ensure the availability of a stable supply of high quality labour and especially to encourage full employment among Nationals”. Hence, an ongoing economic policy focus is to develop improvements in the labour market.
In the study, four modeling scenarios have been developed to simulate the impact of key policies that are likely to be implemented as part of the Abu Dhabi Economic Vision 2030.

Moderate Growth Scenario:
The Moderate Growth Scenario is used to provide a basis of comparison, against which the impact of specific policies under the Vision can be assessed. It simulates a situation in which the Abu Dhabi economy grows at a moderate pace over the next twenty years, slightly below the growth targets set out in the Vision.
The remaining scenarios introduce key policies under the Economic Vision 2030, one-at-a-time. These are policies to improve the economy in the areas of Innovation, the Nationals workforce and the Non-nationals workforce.

Innovation Scenario:
The Economic Vision outlines a number of proposed reforms aimed at growing key sectors of the economy by encouraging innovation and investment in these sectors. Suggested policy initiatives include greater investment in supportive infrastructure and health services; refinement of the legislative/regulatory framework to maximize efficiency; and encouraging growth in high-end tourism.

Improved Nationals Workforce:
Increasing the contribution of Nationals to the labour supply is one of the key policy objectives of the Economic Vision 2030.The Improved Nationals Workforce Scenario (“Nationals‟ scenario) builds on the Innovation Scenario in two key ways. First, it simulates a gain in educational attainment for Nationals, raising their productivity. Second, it simulates gradual gains in labour force participation rates for female Nationals, from current low levels to medium levels.

Improved Non-nationals Workforce:
The Vision recognizes the need to attract a skilled workforce from abroad to support fast-paced growth in the non-oil sector of the economy. The Improved Non-nationals Workforce Scenario (“Non-nationals” scenario) builds on the Nationals Scenario by simulating the impact of a shift in foreign worker policy in favor of higher education levels.